Associations Now

Turning to a New View

Associations Now,
July 2008
, Feature
By:Kim Fernandez

When their industry faces economic woes or unprecedented change, your members look to you for a guiding light. By meeting challenges head on with a positive—but realistic—outlook, your association can prove to be more valuable than ever.

Summary:
When your industry struggles, your association can help shine a light on the path out of trouble. But what affects an industry also affects an industry’s association, so how do you serve as a searchlight when things are looking dim for you, too?

It’s a scenario many associations are facing this year: Things are rolling along at a good clip when, seemingly out of the blue, the economy tanks. Food prices skyrocket, travel becomes outrageously expensive, people from every walk of life cut spending, and a lot of industries start to suffer, or at least panic a bit that their annual conference won’t be a realistic thing for many members.

That’s bad enough and almost sure to have an affect on the way a trade association does business, but what about when a specific industry faces big changes—the kind that start decimating the way members do business? And what if those changes threaten the very mission of the association?

Think it won’t happen? Don’t share that with the staff of the National Association of Recording Merchandisers (NARM). Not only did they face the near death of vinyl records some years back, but the dawn and rapid growth of digital music downloads took a huge toll on the sale of music in every traditional form.

When Napster hit the scene in 1998, it allowed music fans to go online to download—for free—the music they wanted instead of visiting a traditional music store to load up on CDs. The result was devastating to the music industry, which filed suit and successfully stopped Napster from giving out music without charging royalties. But by then, the damage was done. Music is still often shared amongst friends, and even though online music stores such as iTunes have found great success, the shift to the digital medium has profoundly affected music retailers; when’s the last time you saw a Sam Goody store?

As their members felt the pinch, so did NARM.

“We’ve seen a dramatic transformation,” says Jim Donio, NARM president. “The advent of file sharing changed the way people discover, listen to, and consume music. It has changed our strategies and our key initiatives. It’s changed the very constitution of who our members are.”

It’s a dramatic example but a very real one. As the economy changes and as businesses change, associations are forced to change as well in order to maintain their member base and to continue operating. And beyond that, the trouble faced by an individual industry, even outside of a general economic downturn, can form a foreboding black cloud over an association’s future prospects.

Thankfully, experts say there are strategies that can not only save a threatened association but allow it to thrive, even in the face of adversity. And association executives who’ve used the plans say they do work, even if they require a complete shift in thinking at the home office.

Preparation

“It’s been a wild ride for the past 10 years,” admits Donio, who says that even once free file sharing was condemned, the profits from selling music online didn’t compensate for the loss of CD sales by music dealers.

“We’ve had to reinvent and reenvision and recast some of what we do,” he says. “It’s been a really challenging process for us over the last 10 years. But we’re about to celebrate our 50th anniversary, and not a lot of organizations get to such a lofty milestone.”

It hasn’t come without struggle. NARM once boasted about 1,000 member companies and has seen that number cut by just more than half over the past decade. But on the bright side, many of those companies have absorbed the employees who lost their jobs when companies like Sam Goody and Tower Records closed their last retail locations.

“I’ve been accused of being relentlessly optimistic,” laughs Donio, after pointing out those statistics. But, he says, that attitude has been invaluable over his 20 years with the association.

“What alternative is there? We’re looking at a transformative period for our industry,” he says. “It’s a complete paradigm shift. Many industries see the players change—that happens. We’re in a situation where the game itself is changing. That’s what’s really significant.”

As a result, the staff and volunteer leaders pushed themselves to change their basic feelings of how the music industry works. By doing that, says Donio, the association remained relevant and invaluable to members, who looked to it for guidance as they faced the end of business as they knew it.

The NARM conference last year featured two full days packed with information about digital music. “It was all about providing our members with information about new technologies,” says Donio. “We looked at the way they are involved. Who are the new partners you need to be looking at and working with? How is the game changing? How are you going to transform your business model to make sure your business continues to be vital and healthy going forward?”

A similar miniconference will occur this year, but that will happen in tandem with an anniversary celebration that will celebrate the past while looking forward.

Turn Bad News Into Good

Other associations say that similar challenges to their industries have also forced a shift in thinking. The National Association of Mortgage Bankers (NAMB) got hit with a massive amount of media attention last year, at the same time its members scrambled to find a way to thrive in the face of the subprime mortgage crisis that painted lenders as predators.

“It was kind of a surprise to us,” admits NAMB Executive Vice President Roy DeLoach. “We anticipated a drop in our membership but found out in December of last year that in some states, our numbers actually ticked up. We’re trying to figure that out.”

He suspects, as do others, that marketing by the association and some proactive decisions made NAMB membership a no-brainer, even for companies that had never belonged, in the face of an industry catastrophe.

“We’ve done marketing to mortgage brokers who weren’t our members,” says DeLoach. “Basically, we told them that this is the time to step up and become part of our association.” By spelling out membership benefits and the steps that NAMB was taking to help the industry, the association reminded brokers that they’d greatly benefit from joining.

That, say experts, is a fantastic strategy when an industry is facing challenges that might threaten association membership rosters and revenue.

“You have to remind your members what value you bring,” says Steven M. Worth, president of Plexus Consulting Group in Washington, DC. “If it’s difficult for you to know that, then this is the time to think about it. Because this is a good time to remind members what value you’re bringing them.”

“AARP has it nailed,” he says of the American Association of Retired Persons, which boasts more than 35 million individual members. “Anyone who receives an AARP card in the mail knows its value. You’re foolish if you don’t belong, even if you’re on a limited income.”

He says that the cusp of a potential industry downturn is the perfect time to sit down and determine just what the association brings to its members and then out and out tell them what you find.

“Can you help members perform better in a recession? Can you make a value proposition in what you bring to them?” he asks. “When it comes time to write that check, do your members really get value out of it, or is it expendable in hard times? This is a time when everybody makes hard decisions. You need to take a strategic look at it.”

NAMB did that, spending several months launching its Lending Integrity Seal of Approval, which members can display and market certifying that their lenders have reached NAMB-approved educational levels, and that they’ve passed criminal background checks.

Members not only liked the idea, says DeLoach, but jumped at the chance to earn their own seals and start telling customers and potential customers that they’d earned it.

“We anticipate that by the end of this year, every NAMB member will have reached that level,” he says.

NAMB board members also decided to help individual members at the same time the association helped redeem the industry’s overall image. “The membership leadership decided to help some of our members who are residential mortgage brokers work in the commercial mortgage broker area as well,” he says. “These are smaller commercial properties—$5 million and below. So we expanded and increased the educational opportunities for residential members to switch over.”

Classes on FHA loans and refresher courses on conventional loans were popular at last year’s conference, says DeLoach. “The larger focus for us was that this market is a reality. How do you adjust your business plan to meet it? How do you brush up on FHA loans, how do you get into expanding revenue streams by getting into commercial mortgages, and what does NAMB bring to you?”

Worth says that’s exactly the right approach. Acknowledging hard times and meeting them head on, he says, is the kind of thing members look for in their association, especially when membership fees might land on the budgetary chopping block.

“Whistling past the graveyard and hoping nobody notices anything is not the way to do it,” he says. “Recognize the reality that this is what’s keeping people awake at night. You know what’s of concern to them, so put yourself in their shoes. What can you provide them that will help them prepare? The worst thing you can do is act like nothing’s wrong.”

Avoiding Gloom

At the same time, executives say, it’s important to focus some attention on the light at the end of the tunnel. Dawn Sweeney, president and CEO of the National Restaurant Association (NRA), says that’s what her staff is doing as fewer people choose to eat out during what they believe is a recession.

“When times get challenging as they are now and have been before and will be in the future, our members expect us to be like they are—creative, innovative, and entrepreneurial,” she says.

NRA has stepped up its advocacy role recently, which members report to be one of the most valuable services they receive for their annual dues. The group has also stressed the products and programs they offer, including an online marketing program, that are designed to help attract customers and keep the food and drink flowing.

“We have a show in two weeks and have a great turnout coming to that—about 75,000 people,” says Sweeney. “The sessions at that show will obviously be targeted to the issues of the day. But our membership is growing. I think that, unfortunately, tough times make an association even more valuable.”

Donio agrees. “This has been painful,” he admits. “Some companies, sadly, through all of this transition are no longer around. There are dozens and dozens of cases where we’ve said goodbye to friends and our colleagues who worked for those companies. But it’s important for us to encourage the fact that the companies that are here continue to benefit from membership and that we are going to continue to support this business going forward. We have the tools to do that.”